Building A Base

In general, yesterday was an extremely quiet session and that is what is needed to build a base from which to rally.

In S&Ps, 10 minutes before the close yesterday, massive buy orders hit the pit. Then another major player sold with just minutes to go, which knocked the market down to the settlement.

Nevertheless, we are trading 700 points above fair value right now. This morning, S&P futures were up 650 at 1438.50.

For today, S&Ps face a key area between 1434.50 and 1436.50. If we can hold above this, look for a run to Tuesday’s high of 1445. Above 1445, expect staircase resistance between 1449 and 1454.50. What we mean by that is we do not expect a quick pop through these prices.

If we were to get above 1454.50, the market sets up for a move to 1468, which is 61.8% retracement of the September 1 1556.50 high to the October 18 1324.80 low. That is our target over the next couple of days.

On the downside, if we get below the 1436.50-1434.50 zone, expect a move to 1427.50. We see light support between 1429 and 1427. If we get under 1425, the market should make a move to 1419, which is a critical level. If we fail to hold support here, look for a move to 1408. Along the way, 1416.50 to 1414 will be support.

The
NASDAQ was trading up 46 handles at 3316 on overnight strength in Intel
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, after it announced that it’s on target to meet next quarter’s sales. Also today, Qaulcomm
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reports earnings after the close.

We see resistance at 3322 to 3335. If we get above that, we should take out yesterday’s high at 3345 and move to 3380. Along the way 3355-3365 is resistance. Above 3380, look for a move to 3450; 3415-3425 is resistance.

On the support side, 3300 to 3290 is support, then 3265 to 3250. Below 3250 look for a move to 3215. Below 3215, there is a good chance we’ll go to 3150. 3185-3175 is support.

The Dow was the laggard yesterday but bounced pretty well into the close. We continue to expect some sideways, give-up action.